Correlation Between Zijin Mining and Aben Resources

Can any of the company-specific risk be diversified away by investing in both Zijin Mining and Aben Resources at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Zijin Mining and Aben Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Zijin Mining Group and Aben Resources, you can compare the effects of market volatilities on Zijin Mining and Aben Resources and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Zijin Mining with a short position of Aben Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zijin Mining and Aben Resources.

Diversification Opportunities for Zijin Mining and Aben Resources

0.42

Correlation Coefficient

Zijin Mining  Aben Resources

Very weak diversification

The 3 months correlation between Zijin and Aben is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Zijin Mining Group and Aben Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aben Resources and Zijin Mining is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Zijin Mining Group are associated (or correlated) with Aben Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aben Resources has no effect on the direction of Zijin Mining i.e., Zijin Mining and Aben Resources go up and down completely randomly.

Pair Corralation between Zijin Mining and Aben Resources

Assuming the 90 days horizon Zijin Mining is expected to generate 16.01 times less return on investment than Aben Resources. But when comparing it to its historical volatility, Zijin Mining Group is 13.25 times less risky than Aben Resources. It trades about 0.03 of its potential returns per unit of risk. Aben Resources is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  20.00  in Aben Resources on October 10, 2024 and sell it today you would lose (15.90) from holding Aben Resources or give up 79.5% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	85.92%
Values	Daily Returns

Zijin Mining Group  vs.  Aben Resources

Zijin Mining Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Zijin Mining Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's primary indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Aben Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aben Resources has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Zijin Mining and Aben Resources

The main advantage of trading using opposite Zijin Mining and Aben Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zijin Mining position performs unexpectedly, Aben Resources can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Aben Resources will offset losses from the drop in Aben Resources' long position.

The idea behind Zijin Mining Group and Aben Resources pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.